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With a tightened economy comes fewer employee incentives, and companies are re-examining — and in some cases, cutting — 401(k) matching programs.

In order to attract and retain employees, many companies offer 401(k) plans with the employer matching a certain percentage of what an employee puts into the account. Lately, said Ada-based Edward Jones financial adviser Greg Flick, some companies have begun to drop their matching programs.

“With economic times being as they are, you have some companies re-evaluating whether or not it’s feasible to continue the match in this economic downturn,” said Flick. “Some companies are choosing to suspend their matches — not to say that that suspension is permanent, but they’re doing it temporarily.”

While such an action sets back an employee’s retirement plan, Flick said it is not something that requires a drastic readjustment.

“As an employee, if you were counting on (the employer’s match) to help supplement the retirement savings that you were doing, what should you do? Now that that is gone, should employees do anything differently?” said Flick.

“Our belief is that, in the majority of cases, no. You should still contribute to your retirement plan. If you have the ability to increase your contribution by 1 or 2 percent to make up for some of that difference, it certainly is advisable.”

Flick said the biggest hit employees will take is the loss of the additional stock shares that the employer’s contribution could have brought them.

“When the market is down and those dollars are buying more shares, any reduction of money going in obviously doesn’t buy as much,” he said.

“If they have the ability to bump their own personal contribution up a percent or two to cover the shortfall while the market is down, it allows them to take the full benefits of systematic investing.”

During the recession of the early 2000s, Flick noted the same thing took place.

“When we had the recession back in 2001 and then you had the aftermath of 9/11, many employers were in a position of evaluating and re-evaluating all of their costs,” he said. “There were employers that chose at that time to suspend their matches, just as they’ve done today. A couple of years later — 2003, 2004 — you started to see those matches come back as things improved economically.”

Flick recommends the best approach to managing personal investment funds is a steady one, and employees should first find out what their company plans to do, and then have a talk with their financial adviser.

“It’s always a good idea to check with their employer to find out if an employer (is going to) reduce or stop their 401(k) contributions,” Flick said. “They would want to check with their employer to make sure there are windows of eligibility where they can restart those contributions.”

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